Chapter 3: Enterprise & Business Growth

qualities of successful entrepreneurs

● risk taker
● effective communicator
● decision-maker
● independant
● creative

contents of a business plans

● objectives
● target consumers
● forecast revenue,sales and profit
● marketing mix
● cash-flow forecast
● location
● business idea
● sources of finance

how a business plan assists entrepreneurs

● give a sense of purpose and direction
● measure success
● ensure it has to ability to pay its debts
● persuade lenders

how government supports business start-ups

● training and support sessions
● entrepreneur zones
● loans/grants
● research facilities

why government supports business start-ups

● create jobs
● adds variety
● can grow in future
● increase competition

measuring business size & limitation of using these methods

● capital employed - business may be labor intensive
● people employed - business may be capital intensive
● value of output - doesn’t consider how efficiently business uses the resources
● value of sales - not useful when comparing different time of products
why businesses want to grow
● easier access to finance
● economies of scale
● greater market control
● higher profitability

how businesses can grow

● internal integration
- new markets
- new products
- improve existing product
● external integration
- merger
- takeover
- vertical integration
- horizontal integration
- conglomerate integration

problems linked to business growth

● diseconomies of scale
● poor communication
● high costs
● conflict between management
● internal growth is slow

why some businesses remain small

● owner’s choice
● provide a personalized service in the niche market
● unable to access external finance
● avoid diseconomies of scale
● ability to respond quickly to market changes

causes of business failure

● poor planning
● poor management skills
● lack of finance
● poor marketing
● competition

why new businesses are at a greater risk of failing

● lack of management skills
● limited experience
● poor market research
● cash-flow problems